We apply a spherical harmonic analysis to the Point Source Redshift Survey (PSCz), to compute the real-space galaxy power spectrum and the degree of redshift distortion caused by peculiar velocities. We employ new parameter eigenvector and hierarchical data compression techniques, allowing a much larger number of harmonic modes to be included, and correspondingly smaller error bars. Using 4644 harmonic modes, compressed to 2278, we find that the IRAS redshift-space distortion parameter is beta=0.39pm0.12 and the amplitude of galaxy clustering on a scale of k=0.1Mpch is Deltamgal(0.1)=0.42pm0.02. Combining these we find the amplitude of mass perturbations is Deltam(0.1)=(0.16pm0.04)Omegam−0.6. A preliminary model fitting analysis combining the PSCz amplitudes with the CMB and abundance of clusters yields the cosmological matter density parameter Omegam=0.16pm0.03, the amplitude of primordial perturbations Q=(8.4pm3.8)times10−5, and the IRAS bias parameter b=0.84pm0.28